tv Nightly Business Report PBS October 17, 2012 7:00pm-7:30pm EDT
captioning sponsored by wpbt >> this is n.b.r. >> susie: good evening, everyone. i'm susie gharib. new home construction is going through the roof, as americans are house-hunting again. more evidence today that housing is getting back to normal. >> tom: i'm tom hudson. energy prices and supplies were hot topics in last night's presidential debate, we look at where they're headed next. and how contract workers are changing the field of public relations, as we continue our look at america's freelance nation. that and more tonight on "n.b.r." >> susie: we begin tonight with more signs of the rebound in housing. the number of builders breaking ground on new homes in september rose to the highest level in four years. housing starts surged 15% from august to september. but things are booming when you
compare building activity to last september: up a healthy 35%. >> reporter: when housing recovers, so will the economy. that was the mantra during the financial crisis. and finally, it looks like the recovery is here, as construction workers are busy across most of the country. in september, the west and south showed the biggest pickup in new home building, but the northeast was still slow. and there are other lingering problems. >> in some parts of the recovery, especially florida as well as in parts of the northeast there are still a lot of foreclosures yet to come that's a red flag that could hold back housing prices and could hold back. construction in those areas, so that's the main threat that we see right now for the housing recovery. >> reporter: the september building activity was way ahead of expectations and surprisingly even though the job market remains weak. >> when we look at home prices, existing home sales, all those indices seem to suggest that
housing is picking up some steam. no it's not quite back to a boom, but it really does look good and i think it really does influence consumer confidence and household wealth or perceptions of household wealth for a lot of consumers. i expect housing to add to overall economic growth for the rest of this year and all of next year. >> reporter: homebuilders are also feeling upbeat. earlier this week, the national association of homebuilders reported the homebuilder confidence is at the highest level in six years. >> we're not going to see jumps like we saw today every month and keep in mind that we're still only a little bit more than half of normal construction levels, typically annual construction, new home starts, is around one and a half billion, we're still a long way from that. so there's a lot of recovery left to go before construction's back to normal.
>> still ahead, cheaper flights on the way this holiday season, we'll tell you why. >> tom: those strong housing starts offset weakness in the blue-chips, as big blue-- i.b.m.'s latest results weighed on the dow. still, the major averages managed to close to the upside. the dow was up just five points, the nasdaq rose three, the s&p added six. >> susie: oil prices bounced around today, finally closing down at $92 a barrel on a bigger than expected increase in u.s. supplies. gasoline prices fell and now average $3.75 a gallon. prices at the pump were a hot topic in the presidential debate last night. we talk now about the outlook for energy with gareth lewis- davies commodities strategist at b.n.p. paribas. so you heard it last night, the candidates went toe to toe in the debate. governor romney accusing the president that for a doubling of gasoline prices over the last four years president
obama defending himself saying it wasn't his fought that there was a recession and a recovery. so who was right here? >> well, really oil prices as a global phenomenon is dependent on what's happening with the world as a whole. so there's a limit to what one country, one government can do in terms of oil prices. what we've seen in the united states is oil production in the u.s. is increasing. but due to other factors around the world and the middle east we're still having higher prices and that's impacting the price of crude. at the moment price of gasoline is below the psychologically important $4 a gallon at the pump in the u.s.. and as such the price of gasoline as a political issue might recede in the coming weeks. >> susie: actually some people are predicting that by the election prices at the pump will get down to $3. do you agree with that, and
why will it drop so much? >> i agree the directionally prices will decline and that i think is the key point. i don't know if they will decline as much as $3. it's outside the control of the government. but what we're seeing is that demand for gasoline normally falls seasonly this time of year. and prices for gasoline are offset to decline. however heating oil prices, whether the demand is set to increase. we see prices for heating oil increasing. so it's a mixed bag. >> susie: tell us a little more about the heating oil, because a lot of people are worry that it will abe colder winter and that it will cost more to heat their home. so with heating oil and natural gas, what can consumers expect? >> natural gas prices will tend to increase with
increasing demand. but we're coming from very low price environment, if you look through history. in terms of disstill ats, the heating oil, we have very low inventories, and in part it's because a lot of disstill at are being exported from the united states to latin america where demand is growing far faster than that region can define heating oil. and as a consequence, inventories in the united states are low for this time of year. if we have a colder be normal winter, one should expect prices to rise. however i believe that the projections for weather for the united states this winter are around normal. but clearly an unexpected cold spell could lead to a price spike. >> susie: all right. we'll have to leave it there. thanks for coming on our prom. gareth lewis-davies.
>> susie: the f.b.i. today arrested a suspect for allegedly attempting to blow up the federal reserve bank in lower manhattan, just blocks away from the new york stock exchange. no one was hurt. undercover agents were monitoring the man's actions and say quazi nafis tried to set off what he thought was a 1,000 pound explosive. he is a 21-year old bangladeshi national, who has been in the u.s. since january, looking at several potential targets. he now faces charges of attempting to use a weapon of mass destruction and providing support to al-qaeda. >> tom: president obama and
governor mitt romney may have been a time zone apart today but they continued trading barbs after last night's second presidential debate. >> let's recap what we learned last night. the tax plan doesn't add up. his jobs plan doesn't create jobs. his deficit reduction plan adds to the deficit. >> i mean he spends most of his time talking about how my plan won't work. what about his plan? we know his plan has not worked. >> tom: "n.b.r.'s" washington bureau chief darren gersh joins us. so, darren, romney floated a new idea last night, capping tax deductions at $25,000 while cutting tack rate for all wage earners. doesn't add to the deficit according to the governor. does it add up, though? >> tom you'll be shocked, shocked to hear that right now it doesn't. we don't have enough details. here's what we know. so the governor has proposed
about $5 trillion in tax cuts. that 25,000 cap he talked about on itemized deductions, according to the tax policy center, would raise about $1.3 trillion. so you have a hole of 3.7 trillion, and we don't know how governor romney would fill that. >> tom: we also haven't heard much on housing from either candidate except for the reference to mortgage tax deductions. housing has been absent from the two debates so far. >> that's kind a surprise especially considering that the swing state of florida, which you're in, housing is critical, right, a lot of people are under water on their mortgages. but i think one reason for that is that solving housing and trying to really address it is very difficult and very expensive. just one example, governor romney's economic advisor glen hubbard before the campaign had a very interesting creative proposal to help people refinance into these lower rates and deal with their negative equity, but
would it have cost the government $120 billion. the boost to the economy would have been huge burke that up front cost is a political loser, shall we say. >> tom: a lot to swallow. speaking of political cost, we haven't heard the fiscal cliff uttered hardly at all in either debate. even though at least one of these candidates, if not maybe both of them, will have to deal witness. >> that's surprising. we're hearing all this stuff about binders full of women, but the fiscal cliff is the biggest single immediate economic issue facing us. but i think i found out today why we may not be hearing so much about it. a poll came out and said that 88% of american voters blame both parties for the mess that we're in. they think they haven't done their jobs and basically they've created this washington mess so, both candidates i think have no incentive to talk about it. >> tom: we know they're going to talk about it after the election because they have to. darren gersh in washington. >> thanks, tom.
>> susie: anyone planning to travel around the holidays, listen up, this may be the year to hop on a plane. ruben ramirez reports on how turbulence for the airline industry may be good for consumers looking for a deal on tickets. >> reporter: the third quarter may be as good as it gets for the airline industry this year. analysts like ray niedl, see revenues of $2 billion, that may sound like a lot, but consider that just a few months ago the expectation was $3 billion in sales. two big headwinds: the first is fuel prices. >> the higher fuel prices were
significant and it appears now looking at the yield numbers that the airlines were not able to pass on the higher prices to the consumer. >> reporter: and the second is: a slowdown in ticket sales that started in august. a.m.r., the parent of american airlines is feeling the slowdown: today the company said quote, "... given the lower booking trends we were seeing over the past few weeks which impacted october. we anticipate the revenue impact will be more evident in october." for each seat its selling, revenues are down, the industry's trade group says its off about 1% year over year. >> the industry cut flights to help it survive the recent u.s. downturn and now that europe's economy is in trouble. it's cutting back on trans- atlantic routes too. add to that, slower business travel as companies hold back plans thanks to growing concerns about next year's fiscal cliff. >> travel managers are already planning their budgets for next year and they have to take that into account, the worst case scenario. >> reporter: but what might not
be such great news for the airlines and their shareholders could mean cheaper tickets this holiday season as airlines cut prices to fill their planes. ruben ramriez, "n.b.r.," new york. >> susie: nike today cut ties with lance armstrong saying the former cycling champion misled the company for more than a decade. nike said the evidence armstrong participated in doping was quote, "insurmountable." but the company will continue to support the live-strong cancer charity founded by armstrong. also today, armstrong stepped down as chairman of live-strong. the chairity has raised half a billion dollars, much of it by selling those popular yellow live-strong bracelets. >> tom: the major stock indices eeked out gains as the stronger home market offset worries about technology earnings. the s&p 500 started strong in the first hour of trading when the home building data was released. the index finished higher by 0.4% volume was up slightly from yesterday.
686 million shares on the big board. 1.77 billion on the nasdaq. the utility sector lead the gains, up 1.3%. the financial sector was up 1.2% as was the energy sector. with new home construction growing, homebuilding stocks continued building onto their gains. k.b. home jumped 8.7%. pulte group gained 5.3%. those two are at new 52 week highs. d.r. horton was up 4.2%. after a quiet few weeks utility stocks were moving higher. this was one of the hottest sectors earlier this year as investors went in search of dividends. the utilities sector exchange traded fund rallied 1.3% rising to a two month high. bank of america's earnings hit the tape today. i should say results because b. of a. didn't earn a profit, but it didn't lose money like it was expected to either.
the bank reported earning nothing in the third quarter. that's much better than the seven cent per share loss analysts were expecting. shares barely moved, down just two cents but volume was heavy. it is the best performing dow stock year to date, up almost 70%. after the close tonight, american express was in focus as a barometer of consumer spending. third quarter earnings matched estimates. amex card members spent more money with the company calling the growth a, quote, "healthy pace," end quote. the stock closed up by 1.3% during the regular session, at its highest price since july. recently, amex has started a pre-paid debit card partnership with wal-mart as a way to reach a different type of customer. after last night's worrying earnings reports and outlooks from two tech giants, technology weighed on the market. big blue saw red. i.b.m. was the biggest percentage loser among dow industrial stocks, falling 4.9%. volume quadrupled with the stock sitting at six week lows. because of the way the dow industrial average is computed, i.b.m. has a significant influence. bigger than fellow dow stock intel. it was down 2.5% after its own disappointing forecast. volume doubled. shares are less than one dollar away from their most recent 52 week low.
for-profit education company apollo continues struggling against shrinking enrollments so its cutting jobs and closing some university of phoenix locations to save money. shares plummeted 22.2%. volume soared with the stock falling to an 11 year low. new enrollments have been cut in half in the past year and a half and apollo expects them to continue falling for at least another six months. four of the five most actively traded exchange traded products were up. the financial sector e.t.f. led the gains up 1.3%. the nasdaq one hundred tracking fund was down a fraction. and that's tonight's market focus.
>> tom: despite the stock market gains this year, there is no shortage of worries for investors. tonight's street critique guest finds many of the worries stem from politics. john hailer is the c.e.o. of natixis global asset management. kind of spritesing here, because the economy is barely growing. we've got weak job market growth, corporate profits are stag nant if not slowing, but it's politics not business fun meants that worry investors. why do you think that is? >> yeah, i think we created a business economic environment that was negative a few years ago, but now it's turned into a political economic mess. basically i think investors are concerned when they see potential for taxes, potential for regulatory changes and a lot of them are concerned and they see that huge deficit and how we're going to get that paid down. i think that creates a lot of uncertainty in the
marketplace. >> tom: your survey of thousands of global investors, more than nine out of ten are concerned, number one, the national debt. this is something significant, but what specifically are the concerns? >> just what is going to eventually happen, if you keep printing money, you keep getting into debt. investors know their own home, especially investors, know their household budget. you can't keep spending money you don't have, eventually something breaks, and that creates a lot of concern among the individual investor. and you've seen them sitting on the sidelines this year, the equity markets are up a substantial amount, yet money is still outflowing out of equity. so there's real concern in negative environment for individual investors right now. >> tom: maybe this explains the next point you found, 88% worry about higher taxes on investment earnings in the future, worried about the debt and paying it back and that may lead to higher taxes, i guess. >> it's all cyclical. one of the things you're seeing in that study as well,
you look at international institutional investors and we did shall survey in 14 countries and basically they're all concerned about regulatory changes and they're also concerned that market volatility is here to stay. and that 08% of them feel they can't help mitigate that or manage that. then you look at retail investors in the u.s., 80% think they're not going to have enough for retirement, but 60% of them don't want to take any more risk, so it's a tough market out there and people are scared still. >> tom: so you get paid by putting money to work, and among the alternative investments you're looking at, real estate environment trusts. what makes you like real estate investment? >> well, i think, not talking about someone's home here, we're talking about investments that have been income stream that are being professionally managed, whatever way you can move into real estate investments, it also performance very well because it's a tangible hard
asset. the fed keeps pumping money into the system, central bank keeps pumping money into the system, lick quidity eventually will see an inflationary environment and real estate is a great hedge against that. >> tom: i take it you do not have a position in iwr, correct, john? >> i do not have a position in iyr. >> tom: john hailer with natixis global asset management. >> susie: in the communications field, you'll find plenty of freelancers. as companies tighten their budget belts, publicity is often one of the first things to be outsourced. its a trend public relations firms are adapting to, even building it into their business models. sylvia hall continues our look at freelancing in today's economy. >> reporter: when we do a story on a business, we usually take our cameras to the office. but notice today, we aren't in one. it's one of the perks of being a freelancer. you may never see her at a corporate desk, but open a newspaper and you can tell karen baratz is hard at work getting
publicity for her clients. the 11-year communications veteran started freelancing to spend more time at home. she found other perks along the way. >> i will not take on a project unless i genuinely and personally believe in a project and i feel that i can really pitch it and work on it passionately and with conviction because i believe in it. that's a luxury that i think you don't always get when you're working for a corporation and perhaps even an agency where you have to work on projects that are assigned to you. >> reporter: baratz says in a slow economy, finding clients takes a bit more work. but, tight company budgets bring some unexpected perks. >> the positions are gone and yet the need is still there. and so that has been both a curse for the people who its affected, but it's actually beneficial for someone like myself who can step in and fill that gap and see that need, and yet the company does not have to pay overhead costs for me to have a desk space, to pay benefits. >> reporter: that theory is making it into the business
models of some public affairs firms. instead of getting office space and hiring full-time staff, boyle public affairs keeps a list of associates or veteran communications freelancers, including baratz. the company reaches out to them with individual projects. >> we're fortunate that we can go to our roster of associates and see who has the exact skills that we need and the experience and who is really excited about this particular client or cause. >> reporter: this video is part of a recent campaign on natural gas. to get it done, the company brought in video producers, web designers and social media managers, since they're all freelancers, overhead is low and clients pay less. >> communications is necessary, but it's something that takes from the bottom line and doesn't add to the bottom line until the results come in. so... so companies are having to be resourceful and i think that's where we have a lot of potential. >> reporter: insiders say
communications is a field where the freelance model really works. but it's not for everyone. to be successful, you have to be very disciplined and good at networking. sylvia hall, "n.b.r." washington. >> tom: our coverage of freelancers continues tomorrow in new york city. where they're breaking ground on the first medical facility dedicated to freelance workers. we'll show you why it's not like your typical doctor's office. also tomorrow, some big earnings after the bell, microsoft and google. we'll have results. >> susie: if you watched last night's presidential debate, you heard both president obama and governor romney talk about their efforts to help small businesses. but when it comes to creating jobs, tonight's commentator says not all small businesses are created equal. here's "inc." editor-in-chief, eric schurenberg. >> reporter: you may not have a clue about economics, but if you've been listening to politicians this year, you know one thing: small businesses create jobs.
clear the way for mom-and-pop owners and we'll be back at 4% unemployment in no time. only problem is, that's wrong. now, small businesses are great, but it should be obvious that putting a dry cleaner or a real estate broker on every corner is not going to save the economy. like big companies, the vast majority of small businesses destroy jobs as fast as they create them. the truth is, as every researcher in the field knows, the companies that create virtually all net new jobs in the u.s. are growth companies. most are small, as are most american companies, but they don't create jobs because they're small. in fact, the growth companies accounting for more than half of all net new jobs start with at least 100 employees, so they aren't small at all. now, politicians have their reasons for perpetuating the myth. the mom-and-pop shop is a piece of americana, and small business owners vote. but the myth breeds a lot of bad job creation policy. the point, after all, isn't to fund thousands of startups. the goal ought to be to identify
growth companies in an area and make sure they're allowed to grow. but myths are appealing, especially in an election year. and there's nothing wrong with encouraging small businesses or startups. it just won't create jobs. i'm eric schurenberg. >> susie: and finally, the highest paid actor on t.v. is "two-and-a-half men" star ashton kutcher with $24 million. forbes tracks the numbers and it reports a couple of $18 million men tied for second place-- "house's" hugh laurie and ray romano. romano's big check came from his short-lived t.n.t. show "men of a certain age". while kutcher's $24 million sounds like a lot of money. tom, that's about half of what charlie sheen was earning when he had that role. >> tom: fellow hawkeye, making it big, how about that. >> susie: how about that. that's "nightly business report" for wednesday october 17. good night, everyone.
you, too, tom. >> tom: goodnight, susie. we'll see you online at nbr.com and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook page at bizrpt. and on twitter @bizrpt.